2018 (9) TMI 378 - AT - Central Excise

Valuation - re-determination of assessable value - consolidated sales consideration for the body built on the chassis which included the cost of raw materials procured by the appellants; body building costs and the profit margin - Section 4(1)(b) read with Rule 6 of the Central Excise Valuation Rules, 2000 - Held that - In the instant case, the appellants have submitted that whereas the Department only excluded the element of excise duty from the assessable value, for quantification of demand, appellants submit that the transaction value of M/s. TML is to be adopted after deducting in addition to the excise duty Sales Tax/VAT paid by M/s. TML and CST paid by the appellants. The point raised by the appellants is valid for arriving at the duty liability. The matter needs to go back to the Original Authority - penalties are set aside - appeals are allowed by way of remand with a direction to the Original Authority to quantify the duty considering the reasonable & applicable deductions on account of Excise Duty/VAT/CST etc. paid by M/s. TML and by the appellants.

Issues:
Determination of assessable value under Rule 10A of Central Excise Valuation Rules, 2000, application of Section 4(1)(a) of the Central Excise Act, 1944, imposition of penalty, interpretation of 'manufacture on behalf of' under Rule 10A, quantification of duty, challenge to calculations at appellate stage.

Analysis:

1. Determination of Assessable Value under Rule 10A:
The appellants contended that Rule 10A was not applicable as they were not manufacturing goods on a job-work basis. They argued that the valuation under Section 4(1)(a) of the Central Excise Act, 1944 was correct. The Tribunal agreed with the appellants' interpretation and directed the Original Authority to quantify the duty considering deductions for Excise Duty, VAT, and CST paid by both the appellants and M/s. TML.

2. Application of Section 4(1)(a) of the Central Excise Act, 1944:
The appellants relied on various judicial decisions to support their position that the sale of body built on chassis should be valued under Section 4(1)(a) read with Rule 6 of the Central Excise Valuation Rules, 2000. The Tribunal accepted this argument and instructed the Original Authority to recalculate the duty based on the transaction value after deducting relevant taxes paid by the parties.

3. Imposition of Penalty:
The appellants argued that penalties should be set aside, citing precedents where penalties were not imposed in similar cases. The Tribunal agreed with this submission and ruled to set aside the penalties imposed by the Department.

4. Interpretation of 'Manufacture on Behalf Of' under Rule 10A:
The appellants presented cases to demonstrate that the conditions of Rule 10A, which apply to manufacture on behalf of a principal manufacturer, were not met in their situation. The Tribunal agreed with this interpretation, stating that the appellants were not acting as agents of the principal manufacturer, and hence Rule 10A did not apply.

5. Quantification of Duty:
The appellants raised concerns regarding the quantification of duty, arguing that the Department had not considered the deductions for sales tax/VAT paid by M/s. TML and CST paid by the appellants. The Tribunal found merit in this argument and directed the Original Authority to recalculate the duty, taking into account these deductions.

6. Challenge to Calculations at Appellate Stage:
The Department contended that the appellants could not challenge the calculations at the appellate stage since they had not raised these issues before the Original Authority. However, the Tribunal found that the appellants' request for re-calculation based on relevant deductions was valid and needed to be addressed by the Original Authority.

In conclusion, the Tribunal allowed the appeals by remanding the case to the Original Authority for a proper quantification of duty considering the deductions for Excise Duty, VAT, and CST paid by the parties, while setting aside the penalties imposed.

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